Saturday, September 8, 2007

I have been hearing stories for the past two months of employers having trouble hiring workers for low-paying jobs, especially in sectors like retail and food that traditionally have high turnover. The fact that this squeeze is occurring during the summer, when the labor market is largest, is a troubling sign for retailers who may end up more than a few workers short later on in the year. There shouldn’t be too much sympathy for the employers, though; there are, in fact, plenty of workers available. But it takes the larger employers a period of time to adjust their pay scales, and until they realize their pay is now too low, and take steps to bump up their wages by around 75 cents an hour, workers could be hard to find.

It is easy to imagine reasons for this change in the U.S. labor market. There are more retail locations open than ever. Some foreign workers have been deported (even pop star Lily Allen was booted out last month — sorry, Lily, I don’t know what our government was thinking) and others have been discouraged from entering the country. In a country that has hundreds of new millionaires every day, more young workers than ever are entering the labor market already wealthy and with little incentive to work at jobs that pay slightly less than a living wage.

Employers can adjust to a smaller labor pool by taking other steps to boost productivity so that all the work can get done with fewer workers. In retail, new, easier-to-use cash registers shorten the lines that form when there aren’t enough cashiers working, and employers may look for similar investments in labor-saving equipment elsewhere. Employers may also look for ways to streamline jobs so they can be done by workers with less training, such as shortening the menus in restaurants — and employers who never took training very seriously may have to start doing so.

One especially encouraging sign is that employers seem more willing than ever to hire high-school age workers, a group that for decades has been mostly frozen out of the job market. It is a sign of the declining influence of labor unions — they were behind the move a century ago to prevent young people from working — that adolescents are entering the job market in large numbers now with relatively little resistance.

It is this last effect that is likely to have the greatest long-term benefit for the economy. It’s a matter of economic development. A 17-year-old with an income has a better chance to buy a vehicle, get a career-oriented education, and have a smooth, productive entrance into the broader labor market. This is a huge step forward compared to those who are forced to start out their adult working lives looking for unskilled jobs within walking distance of home. College is the biggest expenditure that teenagers make, so it stands to reason that more income for teenagers means more of them can go to college.

And this last effect is the reason I think you’ll see more of the corporate conservatives in Washington insist that the United States must let in more foreign workers. Corporations maintain their power in part by keeping workers off balance, and that is hard to do if an ordinary 17-year-old can gain the economic power that comes with a car and a college education. By letting workers get off to a quick start in life, a high level of teenage employment undermines the big corporations’ grip on power. But while corporations can expect to get a small measure of relief from Washington, it will surely not be enough to bring back the depressed labor market of the past.

Those who imagine that teenage workers will blow all their newfound money on handbags and music CDs are sadly behind the times. Teenagers actually spend less on clothing, accessories, and entertainment than the 20–59 crowd, and they save a higher fraction of their income than any other age group. And so even though they face new economic disadvantages, such as the high cost of insurance and college, we can expect most of them to enter the job market ready to get things done. The economy will never be the same.